The upcoming shift in the federal tax code for 2026 is poised to impact the paychecks and tax refunds of millions of Americans. As the provisions of the 2017 Tax Cuts and Jobs Act (TCJA) are scheduled to expire at the end of 2025, taxpayers could see a return to pre-2018 tax brackets — leading to higher tax bills for many, especially for middle-income and higher earners. These potential changes are raising questions among individuals and businesses about how to prepare financially and strategically in the coming months.
The expiration of the TCJA would result in a reversion to the previous tax system unless Congress steps in with new legislation to extend or modify current rates. Understanding how these adjustments to federal income tax brackets and standard deductions affect you is essential. Whether you’re a single filer, head of household, or married filing jointly, your take-home pay, deductions, and potential refund could all be substantially different beginning January 1, 2026.
2026 IRS tax brackets at-a-glance
| Filing Status | 2026 Projected Brackets (Post-TCJA Expiry) | Current TCJA Brackets (2024) |
|---|---|---|
| Single Filers | 10%, 15%, 25%, 28%, 33%, 35%, 39.6% | 10%, 12%, 22%, 24%, 32%, 35%, 37% |
| Married Filing Jointly | 10%, 15%, 25%, 28%, 33%, 35%, 39.6% | 10%, 12%, 22%, 24%, 32%, 35%, 37% |
| Head of Household | 10%, 15%, 25%, 28%, 33%, 35%, 39.6% | 10%, 12%, 22%, 24%, 32%, 35%, 37% |
| Standard Deduction (Single) | Approx. $6,500 | $14,600 (2024) |
| Standard Deduction (Married Joint) | Approx. $13,000 | $29,200 (2024) |
What changed under the Tax Cuts and Jobs Act
Originally enacted in 2017 and taking effect in 2018, the Tax Cuts and Jobs Act (TCJA) temporarily lowered tax rates across nearly all income levels, nearly doubled the standard deduction, and significantly altered deductions and exemptions. The law was structured to sunset many of its provisions after 2025, unless extended by Congress.
Before TCJA, tax rates ranged up to 39.6%. The law compressed and lowered several of these rates, with the top rate dropping to 37%. Importantly, deductions for personal exemptions were removed, but the standard deduction increased substantially. These moves simplified filing for many households but may reverse soon. Barring new legislation, these temporary changes will expire, and the U.S. will effectively return to the pre-2018 system.
Who qualifies and why it matters
Americans across all income levels will be impacted by the return to pre-TCJA tax brackets. For example, single filers making between $45,000 and $160,000 could see their marginal tax rate increase significantly in 2026. Households filing jointly that fell into the current 22% or 24% brackets may once again face 25% or 28% rates, depending on their taxable income.
This shift doesn’t just influence end-of-year tax bills. Monthly take-home pay could shrink as employers adjust payroll withholdings to accommodate new tax brackets. Taxpayers currently benefiting from the higher standard deduction and expanded child tax credit may no longer enjoy those same benefits, which could lead to a noticeably smaller refund — or a tax payment — come April 2027 when 2026 taxes are filed.
Winners and losers of the tax bracket reset
| Group | Impact |
|---|---|
| High-Income Earners | Higher rates may increase tax bills by thousands annually |
| Middle-Class Families | Could lose value from child tax credits and higher standard deductions |
| Low-Income Individuals | May see smaller refunds if Earned Income Tax Credit isn’t expanded |
| Tax Professionals & Planners | Likely to see increased demand for services |
| Retirees | Higher taxable income from withdrawals taxed at higher bracket |
Planning for the changes ahead
With time still left before the 2026 tax year begins, working with a qualified tax advisor or financial planner can help ensure you’re not caught off guard. Adjusting retirement contributions, charitable giving strategies, and withholding taxes now can all help reduce the potential tax burden. If you’re considering realizing capital gains or large distributions, doing so before the brackets shift could be financially advantageous.
“We’re advising many clients to take advantage of the current lower brackets while they last — particularly for Roth conversions and long-term charitable planning strategies.”
— Jessica Phillips, CFP®, Certified Financial Planner
Business owners should also be proactive. Several key deductions and incentives tied to the TCJA — such as the qualified business income (QBI) deduction — are also set to sunset. Without legislative renewal, business taxes could rise significantly, particularly for sole proprietors, LLCs, and S corps currently benefiting from the 20% QBI deduction.
The role of Congress in determining your tax future
Unless Congress proposes and passes new tax reform, the reversion of rates is automatic starting January 1, 2026. Politically, tax reform is consistently a hot-button issue, especially heading into an election year in 2024. A shift in political power could result in efforts to either permanently extend the TCJA’s key provisions or allow them to lapse.
Lawmakers will face pressure from constituents on both sides. While higher-income individuals may advocate for extension of the lower tax brackets and estate tax levels, others demand a rollback as a way to generate revenue and reduce the federal deficit. Either way, the tax code in 2026 will be heavily shaped by the election outcomes.
How to prepare if you’re a wage earner
One of the most immediate impacts of the new tax brackets will be on wage workers. As payroll systems reset to reflect higher withholdings, employees could see a slight dip in take-home pay. Reviewing your W-4 form and updating your withholding amounts may help soften the impact of these shifts.
“Waiting until 2026 to check your withholding could result in a nasty tax bill. Adjust now to avoid surprises later.”
— Marcus Hall, CPA and Tax Strategist
Maximizing retirement contributions, leveraging flexible spending accounts (FSAs), and exploring health savings accounts (HSAs) are all employer-sponsored options that can reduce taxable income. Don’t wait until the brackets change — planning now could prevent future headaches.
2026 tax year FAQs
Will tax rates definitely go up in 2026?
Yes, unless Congress passes new legislation, the TCJA provisions will expire at the end of 2025, leading tax rates to return to higher pre-2018 levels.
Will the standard deduction decrease in 2026?
Yes. The nearly doubled standard deductions under TCJA will revert to previous levels, reducing from approximately $14,600 for singles and $29,200 for couples to about $6,500 and $13,000, respectively, adjusted for inflation.
How will these changes affect my paycheck?
With higher tax rates and reduced deductions, more federal tax may be withheld from your paycheck beginning in 2026.
Is the child tax credit also changing?
Yes. The current $2,000 per child credit may decrease, and eligibility thresholds could tighten unless Congress extends the expanded TCJA credit provisions.
What can I do now to prepare?
Review your current tax situation, increase contributions to retirement accounts, and consult a tax advisor to strategize before the end of 2025.
Will capital gains taxes be affected?
Generally, the capital gains tax structure remains separate, but some high earners may see changes if rate thresholds are adjusted by new policy.
How might these changes affect small businesses?
Small businesses could lose access to the 20% QBI deduction, increasing their overall tax liability if reforms are not extended.
Can Congress prevent the tax bracket change?
Yes. Congress could vote to extend or permanently adopt many TCJA provisions. However, it depends on political negotiations and election outcomes.
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